Economic development

As I continue to read "A Great and Shining Road" about the building of the transcontinental railroad in the 1860s, I continue to be amazed at the number of parallels between that project and the effort to get fiber to homes and businesses today.

While the scale of the two projects is different (the railroad was going to span the continent, while fiber needs to be built within towns and cities), the *resistance* to the project is the same.

Some of the fiercest opposition to the proposed transcontinental railroad came from the incumbent railroads, who saw competition as a bad thing. The incumbents got newspapers to print mis-leading articles and they wined and dined legislators and told them there was no need for another railroad. One railroad magnate even grandly pronounced that there was no need for a transcontinental railroad because hardly anyone traveled between the East Coast and the West Coast.

Of course, there were few travelers because there was no easy way to get across the country--sailing around the tip of South America or traversing the Isthmus of Panama (death from yellow fever was common), or braving Indian attach going cross country were the only three options. Today, we have incumbent telecom providers saying the same thing: "No needs a Gig of bandwidth because no one is using a Gig of bandwidth."

Well, you can't use it if you don't have it.

Here we are, more than 150 years later, repeating history, fighting the naysayers and entrenching interests.

Of course, we know how things turned out for the "crazy" concept of a transcontinental railroad: it transformed the nation and unleashed decades of economic growth across the entire country.

I've been reading "A Great and Shining Road," by John Williams. It tells the story of the development of the transcontinental railroad, and has much detail in the beginning about the development of rail transportation in the U.S., as it started on the east coast.

The parallels to the last decade of development of fiber networks is remarkable. There was fierce opposition to the railroads from the entrenched canal and toll road owners and operators. It was difficult to get financing for the newfangled railroads because wealthy investors did not want to take any risks; they wanted to stick with the tried and true "old" transportation systems.

Fiber is the transportation system of the 21st century, but it is still seen as a risky investment by many. How is it a transportation system? Here is just one example: music. Music used to require physical roads to deliver records/CDs to customers. Today, music is *transported* by fiber networks directly to customers.

If you substitute the cable and phone companies for the toll road/canal owners of the railroad era, there is an amazing overlap in the issues of economic development, entrenched interests, investment capital, and community infrastructure.

In the end, railroads unleashed a long period of rapid economic growth, but the railroad visionaries had to overcome resistance from many sectors of the government and the economy.

The "slow or non-existent" broadband service in and around Loch Ness in Scotland is driving tourists away, who flee in horror, not from Nessie, the once and future Loch Ness Monster, but from un-usable broadband.

Broadband is basic infrastructure for community and economic development.

The Blandin Foundation has a must-read letter from a relatively small business that illustrates very clearly the problem that "not enough broadband" has on economic development.

The whole letter lays out numerous problems, but this is one of the most striking:

"I find many candidates that are excited to raise a family in a rural community, but they do not want to live in the digital equivalence of the 1980’s."

This is the challenge rural communities face in a single sentence. How do you continue to attract and retain young workers as your broadband capacity falls farther and farther behind? Read the whole thing.

The Top7 list is dominated by the United States with three communities: Arlington County, Virginia; Columbus,Ohio; and Mitchell, South Dakota.

The others come from four nations: Ipswich, Australia; New Taipei City, Taiwan; Rio de Janeiro, Brazil and Surrey, Canada. Four of the cites are on the Top7 list for the first time: Mitchell, New Taipei City, Rio de Janeiro and Surrey.

“Each is ‘revolutionary’ in its own way, and each has planned its future in a way that is consistent with its cultural identity, while using universally available digital tools and broadband technology," said Intelligent Community co-founder Lou Zacharilla.

Disclaimer: I have been a juror for the ICF for several years. The ICF work is important because broadband, by itself, does not make a community "smart." Intelligent communities develop an integrated community and economic development strategy that makes broadband an infrastructure building block that supports a broader set of goals and objectives.

The Intelligent Community Forum has announced the twenty-one community candidates for 2015. This year's submissions come from diverse locations ranging from Kazakhstan to Kenya and Taiwan to the United States. The Smart21 represent a cross section of the world with five communities from the United States, four from Australia and four from Taiwan as well as three Canadian cities. Plus one each from Kazakhstan, Brazil, Japan, Kenya and New Zealand. More than 300 communities submitted nominations.

I have been a juror for the final seven for several years now, and it has been interesting to read about these communities, as they validate what I have observed in my own work reaching back into the early nineties.
The communities that are successful with their broadband initiatives are almost always the ones that have taken the time to answer the question, "What do we want to be in ten years?" "What do we want to offer as a community to keep people here and to attract families and businesses?"

Answering these questions is hard work, takes time, and requires developing a consensus in the community about where to invest time and energy. But it pays off with often dramatic results. Another thing I have observed about the top ICF candidates is that they plan and execute for the long haul--that is, they don't think that there are silver bullets out there that will solve all their problems magically. ICF communities succeed because they work at being successful.

I was fortunate enough to read an advance copy of Brain Gain: How Innovative cities create job growth in an age of disruption. The book does something which is too often overlooked: Making the case that broadband investments have to be thoughtfully linked to broader community and economic development goals. The book is written by the founders of the Intelligent Community Forum, Robert Bell, Louis Zacharilla, and John Jung. I have known these guys for years, and have served as a juror for the annual ICF "Intelligent Community" awards (Note: I don't get paid for that work).

In my experience, the communities that take the time to set a vision for the community are much more likely to see their broadband investments have a long term impact. If a community cannot answer the question, "What do we want the community to look like in ten or fifteen years?" then throwing some fiber in the ground is not likely to help much.

The book provides an insightful analysis of eighteen communities that have taken the time to ask the right questions about the future, have allocated the right funding and human resources to put the right infrastructure in place, and have given their efforts time to mature. There are a lot of good ideas and concepts in this book.

If you are an elected official or an economic developer, everything you wanted to know about why high performance, affordable fiber networks are important is contained in this one story:

Brandon Schatz, CEO of SportsPhotos.com Inc., said he moved his business from Springfield, Missouri, to Kansas City, Kansas, in February 2013 to take advantage of Google Fiber.
“It was a very easy decision,” he said. “We’re trying to grow to hundreds and thousands of events. You can’t scale if your whole city isn’t fast enough.”
The service also is cheaper. In Springfield, he was paying $400 a month for 100-megabyte download speeds. Now, he pays $70 a month for Google Fiber’s 1-gigabit speeds, which are 100 times faster. He added the service is more reliable.

Broadband Communities magazine has a story that should be required reading for every community wondering if there is linkage between Gigabit fiber and economic development. Lafayette's municipal Gigabit fiber network has brought Hollywood special effects jobs to the community, more than a hundred, because the high performance Gigabit network lets Pixel Magic move the computer files back and forth between Lafayette and California quickly.

Pixel Magic brought jobs to Lafayette because the local economic developers created a 3D visualization facility (Louisiana Immersive Technologies Enterprise, or LITE) that was designed specifically as an economic hub. LITE has been a huge success that has attracted several new companies to Lafayette. You don't think of Gulf Coast Louisiana as a high tech destination, but the combination of Gig fiber and a broad economic development vision has been successful.

Lafayette's success also demonstrates that you can't rely on the Field of Dreams model: "If we build it, businesses will come." Lafayette has been successful because they linked their fiber network to a carefully thought out economic development strategy. Be sure to read the whole article. It's an eye-opener for those arguing that communities should not be investing in fiber.

I've been talking about this for fifteen years. New data, from an article at Forbes, suggests that demand for office space may have peaked in the U.S, and that what may be the trend in the future is work from home and business from home activities. According to the article, the number of people working from home as self-employed has risen 14% in the past decade.

Neighborhoods are business districts, and need to be treated as such by economic developers.

This means that you want to be able to deliver business class high performance affordable broadband into your neighborhoods, and that generally means you want fiber, with business class symmetric service available. Places like FastRoads in rural New Hampshire are already doing this (a Design Nine project), and not surprisingly, a lot of homes (er, business locations) are signing up for 50 meg service--well beyond what cable and DSL is able to offer in most places.

It's not that communities should stop paying attention to downtowns and business parks....just the opposite. But if your community's economic development strategy does not have goals and objectives focused on supporting neighborhoods as business districts, you are missing some business attraction and job creation opportunities.

Communities that ignore this data and continue to hope that marginal DSL, asymmetric cable, and too-expensive cellular data services are "good enough" are closing off their own economic future.

The incumbents have cleverly turned broadband into an entirely pointless and futile debate about speed, when speed really has very little to do with it. Here's why:

If you are building a fiber network today, it costs virtually nothing extra to provide a Gig connection to every home and business. Gig network gear is now priced to place everywhere. The telephone and cable companies continue to talk about Gig networks as some kind of hideously expensive, esoteric option. Amazon's Kindle Fire HD tablet costs more than the Gig box we use in our networks now, but no one says the Kindle table is too expensive.

The incumbents slyly turn every discussion of bandwidth (which again, is mis-guided) into another pointless argument by claiming, "No one needs a Gig of Internet." Agreed! But we are talking about the size of the road, not the size of one truck that uses the road. Broadband is the road, and when we deliver a Gig on our networks, it is a Gig digital road to everyone's home and business. A package of Internet is just one "truck" that uses that road. Other "trucks" include business videoconferencing, access to the company VPN from home, large file transfers, and many other services (trucks).

The incumbents have been hugely successful with these two strategies of diverting the discussion to stuff that does not really matter. Instead of talking about the real issue, everyone ends up confused and frustrated with the misinformation.

I am reminded of a household study done in a rural county in the northeast about seven years ago. This was a very large, relatively isolated area, and it was the first time economic developers had ever polled households to see if there was any business activity in the home. They were shocked to discover more than 400 businesses that had never appeared on their radar. And I continue to see that today, with a continued over-emphasis on industrial parks, retail, and other traditional lines of business. It's not that those should be neglected, but with small and start-up businesses adding most new jobs.....neighborhoods and rural roads are business districts that need time, attention, and support from economic developers and community leaders.

Via Eldo Telecom, news that in England, people are moving from the country to larger towns because of bad Internet access. As Fred Pilot of Eldo points out (correctly, I believe), rural communities in the U.S. are also at risk. It's hard to imagine how anybody can manage with a dial up connection at home, which of course leads to people parking in the McDonald's parking lot so they can retrieve their email or so their kids can do their homework. Fred also points to a 2009 study showing that home buyers in the U.S. rank fiber broadband service as the number one amenity they look for in a property.

This article in readwrite confirms something I have suspected for a long time: that most successful entrepreneurs are not twenty-three and worth a billion dollars. In fact, according to the article, "...twice as many successful entrepreneurs are over 50 as under 25. A whopping 75% have more than six years of industry experience and 50% have more than 10 years when they create their startup."

And get this datum: "...the highest rate of entrepreneurship in America has shifted to the 55–64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34. Indeed, Kauffman highlights that the 20-34 age bracket has the lowest rate of entrepreneurial activity."

What does this mean for broadband? I see a lot of communities trying to leverage broadband with an economic development strategy of trying to attract twenty-something entrepreneurs. And it turns out, according to the data above, that this is not likely to turn out well.

If you think you are going to attract those young, business-hungry entrepreneurs types with some mediocre broadband, a couple of bike paths, and a Starbucks, think again. A start up company called Happy Hubs has just ratcheted the whole entrepreneurial attraction game up several notches. Happy Hubs is renting out luxury workspaces in Costa Rica, and is offering five star amenities like massage therapy, gourmet food service, maid service, and access to a beach. Oh, and of course, lots of broadband. And the whole package compares favorably to what someone might spend in the U.S. on a lackluster place to live, food, and Internet--without all the amenities.

Economic development is global. And broadband is enabling the portable business. If your community can't deliver affordable, high performance broadband services, nothing else really matters.

There is some moderately coarse language in this article, but it is worth reading if you are interested in economic and community development. What caught my eye is how successful Chattanooga has been in re-inventing itself as the "Gig City." Three years ago, it is hard to imagine that the creative class in places like New York and Los Angeles could even tell you what state Chattanooga was in, but today, it has become the place for the young and restless to move to. The low cost of living and cheap Gigabit fiber is drawing the Millenials to Tennessee, of all places, but it is really the fiber that has been the catalyst.

I see two things driving bandwidth demand in the business sector: VPNs and videoconferencing.

We talked to a large corporation that has a plan to move 20% of its workforce to the home--an option its wants to make to employees as work life quality issue (e.g. young children to take care of, time shifted work hours, etc.). They want a 50 meg, symmetric, low latency connection between every home based worker and the corporate network. Their math for that amount of bandwidth was simple. They intended to put an HD video camera and large screen monitor on every home-based worker's desk to support ubiquitous and convenient videoconferencing with supervisors and co-workers, and they wanted to support minimum of four people on a call simultaneously, meaning 8-10 Meg x four video streams, or as much as 40 meg just to stay connected.

I was in a branch office of a software firm with an interesting set up. They had two very high resolution HD cameras and two very large HD monitors with four large easy chairs facing the equipment. An identical set up was in the main office. They left all four cameras running 10-12 hours a day so that there was a full time HD video connection between both locations, and so it was very easy to have casual and spontaneous conversations with folks in either location. Both offices had affordable fiber connections, so they could "waste" the 40 to 50 meg of bandwidth that these four cameras used continuously for ten hours a day. But this becomes easy AND useful when you have an affordable Gigabit symmetric connection.

Communities that want to attract (or retain) companies using bandwidth this way need to be building a "Gigabit City," and doing it now.

Communities are still putting off taking control of their economic future...despite more than a decade of waiting for the private sector or the Federal government to do something.

Many communities have a blind faith in wireless...that if they wait long enough, a "breakthrough" wireless technology will save them the effort of investing in duct and fiber. Medin makes the point I have made many times, which is you can't expand wireless without lots of fiber.

Read this short but detailed discussion of the space problem for start-ups and entrepreneurs by Melissa Thompson. Finding the right office space at an affordable price is a huge issue for small, entrepreneurial businesses. Many of them start in the home, but if they grow beyond a couple of employees, they will usually be looking for office space, and in my experience, many local and regional economic development organizations are not well prepared to help with this. The traditional business incubator may does not have the right size offices or facilities for start ups (many do, but not all of them that I have visited), and location is everything: entrepreneurs want to be in town, where good coffee and business-oriented restaurants are used as adjunct meeting space and brainstorming locations. And of course, affordable high speed broadband is essential because I can guarantee any new start up is going to make heavy use of videoconferencing.

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